Oriental Union Chemical : Quarterly Earning Document

Oriental Union Chemical Corporation and Subsidiaries

Consolidated Financial Statements for the

Nine Months Ended September 30, 2021 and 2020 and Independent Auditors' Review Report

nine-month periods ended September 30, 2021 and 2020, the amounts of the share of loss recognized from investments accounted for using the equity method were NT$11,767 thousand, NT$15,687 thousand, NT$34,687 thousand, and NT$67,438 thousand, respectively. These investment amounts were calculated and disclosed on basis of the associates financial statements which have not been reviewed for the same periods.

Qualified Conclusion

Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the non-significant subsidiaries and the financial reports of investments accounted for using the equity method as described in the preceding paragraph been reviewed, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not give a true in all material respects, the consolidated financial position of the Group as of September 30, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the three-month and nine-month then ended September 30, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the FSC of the ROC.

The engagement partners on the reviews resulting in this independent auditors' review report are Hsin-Wei Tai and Yu-Wei Fan.

Deloitte & Touche

Taipei, Taiwan

Republic of China

November 5, 2021

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the ROC and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the ROC.

For the convenience of readers, the independent auditors' review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the ROC. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors' review report and consolidated financial statements shall prevail.

- 2 -

ORIENTAL UNION CHEMICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

			September 30, 2021							December 31, 2020						September 30, 2020
			(Reviewed)							(Audited)						(Reviewed)
ASSETS			Amount	%						Amount	%					Amount	%
CURRENT ASSETS
Cash and cash equivalents (Notes 6 and 28)	$	2,190,695			6			$	2,734,878			8		$	3,873,677		11
Financial assets at fair value through profit or loss (Note 7)			49,293		-						59,488		-					45,758		-
Financial assets at amortized cost (Notes 9 and 28)			509,729			2						-		-					9,614		-
Notes receivable, net (Notes 10 and 28)			132,784			-						193,353			1					67,327		-
Trade receivables, net (Note 10)			1,047,867			3						860,472		2					804,644		2
Trade receivables from related parties (Notes 10 and 28)			179,988			1						161,172			-					106,037		-
Other receivables (Note 28)			555,049			2						550,216			2					551,834		2
Inventories (Note 11)			1,072,463		3						989,670			3					1,263,322		4
Prepayments for purchases (Note 28)			310,664			1						235,263			1					208,709		1
Other prepayments			84,347		-						124,739			-					146,294		-
Other current assets (Note 17)			163,395			-						377,030			1					1,202,055		3
Total current assets			6,296,274			18					6,286,281			18				8,279,271		23
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income (Notes 8 and 28)			5,785,533			17					5,623,314			17				5,761,330		16
Financial assets at amortized cost (Notes 9, 28 and 29)			64,055		-						74,204		-					64,247		-
Investments accounted for using the equity method (Note 13)			1,500,565			4						1,854,779			6					1,924,325		5
Property, plant and equipment (Note 14)			13,059,772			38					13,837,770			41				13,705,610		38
Construction in progress (Note 14)			1,376,131			4						734,464		2					763,051		2
Right-of-use assets (Note 15)			385,569			1						401,940			1					386,368		1
Investment properties (Note 16)			1,991,426			6						1,991,488			6					1,991,509		5
Intangible assets			31,379		-						31,431		-					21,771		-
Deferred tax assets			571,997			2						749,996			2					881,575		2
Other non-current assets (Note 17)			3,341,474			10					2,517,960			7					2,779,059		8
Total non-current assets			28,107,901			82					27,817,346			82				28,278,845		77
TOTAL	$	34,404,175			100		$	34,103,627			100	$	36,558,116		100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 18 and 28)	$	5,480,312			16		$	6,885,222			20	$	7,829,518		22
Notes payable			-			-						98,209		1					96,144		-
Trade payables			1,334,599			4						1,100,550			3					1,114,824		3
Other payables (Note 19)			1,507,139			4						408,856			1					1,175,189		3
Other payables to related parties (Note 28)			61,371		-						55,860		-					93,672		-
Current tax liabilities			30,343		-						31,424		-					35,481		-
Lease liabilities (Note 15)			7,906		-						8,103		-					8,332		-
Other current liabilities (Note 20)			375,205			1						323,630			1					318,703		1
Total current liabilities			8,796,875			25					8,911,854			26				10,671,863		29
NON-CURRENT LIABILITIES
Long-term borrowings (Notes 18 and 29)			8,579,522			25					9,249,176			27				9,264,573		26
Deferred tax liabilities			716,947		2						705,372			2					703,052		2
Lease liabilities (Note 15)			4,242		-						7,130		-					8,947		-
Deferred revenue			-			-						-		-					95,242		-
Net defined benefit liabilities			209,930			1						259,680			1					252,931		1
Guarantee deposits			35,641		-						34,518		-					26,255		-
Other non-current liabilities (Note 20)			46,283			-						24,091		-					20,304		-
Total non-current liabilities			9,592,565			28					10,279,967			30				10,371,304		29
Total liabilities			18,389,440			53					19,191,821			56				21,043,167		58
EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 22)
Common stock			8,857,031			26					8,857,031			26				8,857,031		24
Capital surplus			958,005			3						956,286			3					829,348		2
Retained earnings
Legal reserve			1,526,813			4						2,327,378			7					2,327,378		7
Special reserve			1,911,129			6						1,911,129			5					1,911,129		5
Unappropriated earnings (accumulated deficits)			835,495			2						(800,565)		(2)				(315,892)		(1)
Total retained earnings			4,273,437			12					3,437,942			10				3,922,615		11
Other equity
Exchange differences on translating foreign operations			(567,888)		(2)				(472,288)		(1)				(595,818)		(2)
Unrealized loss on financial assets at fair value through other comprehensive
income			(440,780)		(1)				(487,204)		(2)				(349,188)		(1)
Total other equity			(1,008,668)		(3)				(959,492)		(3)				(945,006)		(3)
Treasury stock			(185,272)		-						(187,798)		-					(187,798)		-
NON-CONTROLLING INTERESTS			3,120,202			9						2,807,837			8					3,038,759		8
Total equity			16,014,735			47					14,911,806			44				15,514,949		42
TOTAL	$	34,404,175			100		$	34,103,627			100	$	36,558,116		100

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated November 5, 2021)

- 3 -

ORIENTAL UNION CHEMICAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share) (Reviewed, Not Audited)

		For the Three Months Ended September 30					For the Nine Months Ended September 30
	2021			2020				2021			2020
		Amount	%				Amount	%				Amount	%				Amount	%
OPERATING REVENUE
Sales revenue (Note 28)	$ 6,975,351		100	$ 4,205,197		99	$ 20,822,453	100	$ 13,407,482		100
Other operating revenue	8,029	-	40,877		1	11,134	-	40,877		-
Total operating
revenue	6,983,380		100	4,246,074		100	20,833,587	100	13,448,359		100
OPERATING COST
Cost of goods sold
(Notes 11, 23 and 28)	6,324,118		91	4,070,984		96	18,771,064	90	12,816,690		95
Other operating cost		-	-	(4,965)		-	-	-	-		-
Total operating cost		6,324,118		91	4,066,019		96	18,771,064	90	12,816,690		95
GROSS PROFIT		659,262	9	180,055		4	2,062,523	10	631,669		5
OPERATING EXPENSES
(Notes 23 and 28)
Selling and marketing
expenses	170,150	2	136,454		3	492,029	2	391,940		3
General and administrative
expenses	62,093	1	62,021		1	198,882	1	205,375		1
Research and development
expenses	48,494	1	37,516		1	143,586	1	113,832		1
Expected credit loss
(Note 10)	42	-	267		-	1,254	-	157		-
Total operating
expenses	280,779	4	236,258		5	835,751	4	711,304		5
PROFIT (LOSS) FROM
OPERATIONS	378,483	5	(56,203)		(1)	1,226,772	6	(79,635)		-
NON-OPERATING INCOME
AND EXPENSES
Interest income	12,046	-	11,660		-	30,132	-	37,721		-
Rental income (Note 28)	9,886	-	9,888		-	29,663	-	29,681		-
Dividend income	70,710	1	49,990		1	71,542	-	49,990		1
Other income (Note 23)	13,814	-	(23,080)		-	591,156	3	32,772		-
Foreign currency exchange
gain (Note 32)	3,455	-	4,937		-	4,454	-	2,979		-
(Loss) gain on financial
assets at fair value
through profit or loss	(3,075)	-	8,409		-	(948)	-	5,131		-
Interest expense (Notes 23
and 28)	(59,632)	(1)	(90,195)		(2)	(202,970)	(1)	(281,238)		(2)
Other expenses (Note 23)	(20,452)	-	(37,479)		(1)	(42,749)	-	(102,369)		(1)
Share of loss of associates
accounted for using the
equity method (Note 13)	(112,948)	(1)	(105,992)		(2)	(324,808)	(1)	(423,331)		(3)
Total non-operating
income and
expenses	(86,196)	(1)	(171,862)		(4)	155,472	1	(648,664)		(5)
PROFIT (LOSS) BEFORE
INCOME TAX	292,287	4	(228,065)		(5)	1,382,244	7	(728,299)		(5)
INCOME TAX EXPENSE
(Note 24)	41,485	-	8,466		-	185,348	1	4,080		-
NET PROFIT (LOSS) FOR
THE PERIOD		250,802	4	(236,531)		(5)	1,196,896	6	(732,379)		(5)
																						(Continued)

- 4 -